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[Dr.Anwalt]

ASA LANUM - FORTEL CORPORATION (ZITL)
CEO Interview - published 05/08/2000

DOCUMENT # JAZ601

Asa W. Lanum joined FORTEL Inc. (formerly Zitel) as President and CEO in
July 1999. Mr. Lanum has over 30 years of experience as an Executive and
Manager in the computer industry in the United States and Europe, and is
the author of more than 30 papers and books. Mr. Lanum was Managing
Principal of the CTO Group, a consulting organization providing
strategic marketing, product and technology advice to end users and
systems vendors in the distributed, open systems, client server
marketplace. Prior to the CTO Group, he was Senior Vice President,
Advanced Systems and Chief Technology Officer for OpenVision
Technologies, a premier supplier of integrated systems and network
management software. Before joining OpenVision, Mr. Lanum was a co-
founder and CEO of Enterprise Technology, Inc., a developer of Intel-
based closely-coupled distributed multiprocessor Unix server clusters.
He has held a number of executive positions within the Industry at ASK
Ingres, Sun Microsystems, ICL, Pansophic Systems and Amdahl. Mr. Lanum
was recognized for innovation in management by the National Engineering
Development Organization of England. He holds a BA in Economics and
Political Science from State University of New York.

Sector: internet services

TWST: Could we start out with an overview and some history of FORTEL to
set the stage for our readers?

Mr. Lanum: FORTEL is the first provider of real-time end-to-end service
level assurance for e-business. What that means is when you`re on the
Web trying to do a revenue transaction with a company ` like placing an
order with an e-tailer or making a stock trade ` the people who run
those systems are interested in making sure the time from when you hit
enter until you get confirmation back is very short. What we`re able to
do is provide them with the ability to look at that response time and
manage it across a complex set of heterogeneous systems on a real-time
basis. It`s a unique position. These capabilities can be applied to a
wide range of business processes beyond service level assurance,
enabling FORTEL to expand its market position and presence over the next
few years. Our core technologies include the ability to do aggregation
of extensive heterogeneous information and real-time correlation of that
information to identify relationships that you may or may not know
exist. Our system can support unlimited kinds of data items, so you can
analyze and evaluate any kinds of trends you wish. The system correlates
trends and relationships by degrees of importance and you get your
responses back almost instantaneously. However, the engines that are at
the heart of our products aren`t dependent on inputs coming from our own
technology; we can use data collected by other monitoring tools. The
engine isn`t directly dependent on IT data; it can take data from any
source. In fact, one customer actually uses our product to monitor
currency fluctuations. We expect to expand into other business process
markets, and will expand our capabilities in visualization technologies
over the next few years to support these moves. Companies have spent a
lot of time and money on supply-side systems like ERP. Now many of these
same companies are working on buy-side systems, such as CR

Ms. There is discontinuity between these systems, which is why you find
out three weeks later that your Christmas order didn`t get shipped. We
think we have technology that will let people tie front-end and back-end
systems together. So when our customer`s customer undertakes an online
transaction, our customer will not find out later that its customer
could not complete the transaction. We all know, in today`s e-business
environment, customer ill will is the greatest negative factor
contributing to lost business and lost customers. That`s where we are
today and where we see things going.

TWST: Who are you competing with in this space?

Mr. Lanum: Our integrated, end-to-end real-time solution is unique.
There have been different approaches to the problem by a variety of
vendors. A number of companies look at specific systems or platforms.
There are suppliers that do analysis and management of Web servers.
There are some that analyze and manage performance of exchange servers
or database servers. The problem for most companies is that their online
service offerings span multiple platforms, operating systems,
applications, and network protocols. There are vendors that focus
efficiently on one piece of the problem, but none giving an aggregated
end-to-end view. It`s like driving your car down the road: the
carburetor or your fuel injectors are working great, but you`ve got a
blown tire on the rear wheel so you`re not really going anywhere very
effectively. Larger suppliers like Tivoli and Computer Associates, with
TME and UniCenter, respectively, have approached the problem from an
event management perspective, as opposed to a real-time and continuous
perspective. The problem with event management is it tells you when
something has gone wrong. It is informational but it might not be useful
if you`ve already reached a failure state. Again, to use a vehicle
analogy, imagine driving down the highway and having all the windows of
your car blacked out so you can`t see your lane or how fast you`re
going; you don`t have a speedometer. You have a buzzer that sounds when
you have exceeded the speed limit. So you don`t know if you`re speeding
up or slowing down or how fast traffic around you is going. All you know
is that when you exceed the speed limit the buzzer goes off. Event
technology works well for many of the management aspects of networking,
but it cannot tell you on a real-time basis how well you`re doing, if
you`re getting better or if you`re getting worse. For e-business
managers, the guys that are responsible for profit & loss, this isn`t
adequate. They need to understand the trends and changes around their e-
business service, and how those trends may impact customers. Waiting
until the customer is already being affected just doesn`t cut it. So, we
have found that our ability to aggregate information and analyze it in
real-time, across the end-to-end e-business transaction, can
significantly enhance the ability of business managers to optimize their
e-services. We believe our capabilities in these areas are currently
unique in the market. We have our own collectors to capture information
and we make it very easy to use output from other products. With some
clients we interface with two or three products, bringing that
information along with data we collect directly. We then correlate it
all and report the information our customers want.

TWST: Tell us about your recent product announcement. What does it mean
for new customers, and how will it affect your existing customers?

Mr. Lanum: Many of our current customers have installed our products on
mission critical applications servers; platforms that drive core
business processes for them. We expect that the enhancements provided in
SightLine, with respect to e-business solutions, will enable them to
more effectively extend their current processes to the Web. The
SightLine product is upward compatible with our current offerings, so
these customers can extend their use of the products transparently. In
fact, as we briefed our customers prior to the SightLine launch, we have
had positive responses with many of them electing to deploy the
SightLine extensions in the near term.

TWST: How big is this market? I know it`s kind of in its infancy, but
how big is it today and how fast is it growing?

Mr. Lanum: IDC expects distributed performance and availability
management software revenues to reach $2.2 billion by 2003. I think e-
business service level performance can grow to be that large by itself
because of its very high value to online revenue generation. You`re
really talking about economic business management. So it is a very
significant opportunity.

TWST: What do you have to do as a company to make sure you take full
advantage of that opportunity?

Mr. Lanum: A key lesson we`ve learned is that this is not a situation
where you can drop the technology on the doorstep and have people easily
and happily put it in and get the results they want. If you`re not there
and able to provide them the services to make it useful to them, they
may or may not get the value out of it. It takes a professional services
organization that can really go in and work with the customer to
understand what information needs to be seen by different managers. If
you ask the technicians, they will tell you that they want to see all
performance and resource utilization detail. If you ask the business
executive, he wants to know if the company is completing transactions in
a specific response timeframe, whether service as experienced by his
customer is getting better or worse, and what`s going to happen if
volume doubles. We are able to provide that service and do it in a very
rapid manner. Our products provide flexible visualization options for a
variety of information and user requirements. One of our executive
customers has implemented a high-level early-warning system of a green,
yellow or red light. The green light indicates that all of the important
transactions, the ones that make money, are fine. Yellow indicates that
service levels are starting to deteriorate, and red that the proverbial
has hit the fan. Reporting to that person are people who want to drill
down to lots of detail. So we configure the display, the visualization,
according to what the person looking at the information values. We have
different simultaneous views of the critical path and its components, as
different people working with the same information need to see different
information. Our product brings together a lot of information from
across different systems that people have not seen before. So we learn
what our clients are really looking for in terms of the value
proposition of the information. From there we configure the outputs so
they are useful to them. And we make sure we bring together all the
pieces of data to make that work. One of the beauties of the product is
its ease of installation and use. While we provide services to tune and
configure it to meet the specific needs of a client, we do that in rapid
timeframes, something new to the industry. Unlike many systems, we don`t
have a 4:1 or higher consulting-to-product dollar ratio. Ours is more
like 1:1, a key benefit for customers. The ease of use of our product is
one of the things that keeps current customers coming back: they can`t
believe that something so powerful can also be so intuitive.

TWST: As you look at the marketplace, how is it going to change over the
next couple of years?

Mr. Lanum: As we look at business performance management, many companies
are trying to streamline their business processes. They are spending a
lot of time and money on supply-chain and buy-chain management. There
remains a disconnect between these systems, and a number of companies
will try to `connect` those systems together. Or the supply-chain people
will say they can provide CRMs in their systems. The problem is that for
the most part they`re unmanageable systems. Most ERP systems were
delivered without any built-in performance management capacity. If
they`re not performing you`ve got to dig out the problems by yourself.
Part of what I expect we`ll see is more companies focusing specifically
on major applications management to get the results needed to make
business work. We will also see companies that look at actual customer
data or purchasing data, to mine the relationships and the value in
them. As a business executive I would really like to be able to identify
a `run` on a product that I am offering early, so I can have inventory
and shipping lined up in advance, to correlate that information to make
sure I can deliver it. Between the Friday of the week before Christmas
and the Monday of the week of Christmas a lot of e-tailers experienced a
fall-off in orders because people felt they weren`t going to get their
items delivered in time for Christmas if they ordered online. Imagine if
you were a company able to do correlation and guarantee delivery, or
tell people when they order that you can guarantee delivery. How much
would that have been worth? If you`re talking about getting 25% of your
volume back for those few days, it`s a very high-value proposition. I
think we`ll see more of these questions and this kind of information
over the next couple of years, where people try to streamline their
online sales delivery presence. I think we`ll see technologies like
SightLine applied to complex business process problems, just the way
they are beginning to be applied to the process of e-business service
delivery today.

TWST: Given the market potential, what kind of growth should investors
expect from FORTEL over the next three or four years?

Mr. Lanum: According to IDC, our performance management revenues have
been the fastest-growing in the marketplace since 1997. Last year
software license fees grew at better than 40% over the previous year. I
would expect to see that accelerate. The limit to our growth is going to
be our ability to execute and grow the organization by getting the
people we need. Investments in engineering have been aggressive during
the past two years, but we`ve been undercapitalized in the size of our
sales force and in our professional service organization. We expect to
double the size of our direct sales organization this fiscal year and to
establish indirect sales channels and partners, both here and abroad. An
example is our agreement with Unisys, announced in January 2000. Unisys,
a long-time customer, has standardized on our product internally for
performance management and will resell our software to its customers
worldwide. This is a substantial business opportunity for us. The
agreement is worth a minimum of $8.9 million over three years.

TWST: For investors keeping an eye on the company, what should they use
as benchmarks to gauge your success?

Mr. Lanum: They ought to be looking at revenue growth, in particular,
growth in software license sales. I would also look at the improvement
in operating ratios. If we meet our revenue growth objectives for FY
2000, we will break-even by year-end. Also, watch our growth in the
volume and dollar-value of the deals that we`re doing, which is
increasing.

TWST: Now using that as a benchmark, again, what kind of rates should
they look for this year? Is 50% doable?

Mr. Lanum: We still have got some things to do, particularly in building
the sales organization and getting our product message heard. There are
two things required: enough thrust and the right direction. We`ve got
the right direction. The question is how much thrust can we apply, and
that`s a matter of how much cash we can invest and how rapidly we can
grow. The market opportunity is there, our technology is very clearly
there, and it`s going to be a matter of just how fast we can grow the
business.

TWST: You mentioned profitability. What kind of an operating margin
should you be able to generate?

Mr. Lanum: I`d like to be in the 15%-20% range by the end of FY 2002,
with steady improvement from now until then.

TWST: What will it take to get you there?

Mr. Lanum: If we get the growth we want, we will be on our way to
achieving these objectives.

TWST: We`ve been talking about growth, and I assume the numbers you`re
talking about are internal.

Mr. Lanum: That is correct.

TWST: Is there any room for acquisitions?

Mr. Lanum: I would not rule those out. There are a number of combination
strategies that would make sense given our perspective on the market
opportunity over the next several years. The market cap on the company
is very low, so we have concerns about dilution at the current
valuation.

TWST: What about further down the road?

Mr. Lanum: Right now my number one priority is how to accelerate channel
capacity. We don`t have enough feet on the street. So I look out there
at some of the people who have been distributors, integrators and
partners with us, and how we might bring these organizations inside for
a better return.

TWST: For investors keeping an eye on the company, what`s the risk, or
what should they worry about at this juncture?

Mr. Lanum: Our product position and market strategy are strong. The
internal risk factors are: being able to operate and execute to our
plan, hiring sales people, adding indirect sales channels, and meeting
our revenue and spending projections. We need to manage cash. I think if
we saw a significant downturn or slowdown in the whole e-commerce, B2B
marketplace, if a lot of companies were to cut back on their
expenditures, it would be a possible risk for us. That would mean the
overall market could slow down. We have begun to experience sales
momentum, with companies picking our products over other options in
head-to-head competitive environments. There are times when competitors
make product announcements without product to back it up. This could
slow buying decisions, which would affect our ability to grow.

TWST: Do you expect a shakeout here in the e-commerce business?

Mr. Lanum: The bottom line is the company has a significant opportunity
in the next 12-24 months. We`re going to build what is a fundamental
enterprise software business that hopefully will be valued based on its
revenue growth, margins, and ability to move products into the
marketplace. If we get that, then I think that the market capitalization
and share price will be commensurate. We will be happy, and hopefully
our shareholders will be as well.

TWST: Do you have the management team in place to get you where you want
to go?

Mr. Lanum: We have a good team on the engineering side, which is
consistent historically. We`ve got a good vision of where we want to go
with the technologies; now we need to make sure that we have the
capacity to execute that vision. We have hired several new sales people,
both managers and sales people, during the last year.

TWST: As CEO of the company where are you spending your time at the
moment?

Mr. Lanum: I think it`s in the Red Carpet Club in between flights. For
some time I`ve been actively involved in getting the company`s vision,
mission and strategy detailed. This was part of the process of preparing
for the recent product introduction and FORTEL launch. Next priority is
to make sure that our operations are equally focused, streamlined and
prioritized. I have spent some time working with investors and analysts,
and I expect to do a lot more in this area. The second is how do I
accelerate the fundamentals for today`s business. How do I make things
go faster? What key partnerships in channels, services or technology
will allow us to penetrate the available market more quickly? The third
major area is looking at the overall market opportunity and how to
capitalize on that using the technology base we have, by building new
areas of competency and partnerships. It`s a combination of
relationships with the outside and strategy and executing the
fundamentals to allow us to grow faster.

TWST: You mentioned repositioning the company. What kind of culture have
you maintained to allow you to do that?

Mr. Lanum: Many years ago, our software people determined that their
vision was to be the performance experts. Within the Unisys marketplace
that`s exactly what they`ve been for many years. They are recognized as
number one in both technology and skills. Now we are focused on e-
business and the transaction-based systems marketplace, and being able
to deliver that degree of competency into this arena. We`re a
distributed organization, with operations in Fremont, Fairfax, Boston
and Leatherhead, Rotterdam, Switzerland, Germany, Australia and New
Zealand. My office is wherever I need it to be. You spend your time with
the people that you need to be with when you need to be there. We are
focused on growing the business.

[ClaudeMonet]

Was heißt das auf deutsch?

[ClaudeMonet]

Some more info on Sightline:

SightLine Packages

FORTEL has created a number of SightLine solution packages, designed to meet the service level assurance needs of
specific eBusiness environments. The SightLine Enterprise packages are focused at larger, more complex ebusiness
deployments and include both product and SightLine Assurance Expert services for deployment, planning and ongoing
analysis. Quickstart packages are pre-configured versions of the product, focused on very specific eBusiness operations.
Quickstarts provide the ability to quickly leverage SightLine for service level assurance in these smaller, more focused
environments. All of the solution packages can be easily extended and customized.
Enterprise Packages

SightLine Enterprise CP (Critical Path) is a bundled software and services solution designed to assure service levels of a
multi-tier enterprise eBusiness application. With Enterprise CP, eBusiness managers will benefit from the immediate
identification of eBusiness critical paths and service flows, and the deployment of an ongoing service level assurance plan.
The bundle includes a suite of SightLine components (Expert Advisors, Visions, Power, Interface and Summary Agents)
configured for an enterprise –class eBusiness application. Also included are Assurance Expert services for initial service
level assurance deployment and planning, as well as quarterly expert consultations to ensure continuing benefits.

SightLine Enterprise WebNet is a bundled software and services solution designed to assure service levels of a large web
server and services deployment. WebNet is an ideal service level assurance solution for Internet Service Providers and
Application Service Providers. WebNet provides the service level assurance to optimize web and network services including
mail, file transfer, web server performance and network performance, while correlating service level relationships between
various web services offerings within the server farm. The bundle includes a suite of SightLine components (Expert Advisor,
Vision, Web and network summary agents) configured for commercial web service providers. Also included are Assurance
Expert services for initial deployment and tuning, as well as quarterly expert consultations to ensure continuing benefits.

Quickstart Packages

SightLine WebHost is designed for web hosting services. It immediately provides an integrated view of the service levels
being delivered by the web hosting and network environment. Key service level indicators are pre-configured within the
package, for automated correlation and true cause discovery. Automated corrective actions and rules for service level
assurance within hosting environments are also included.

SightLine StoreFront is designed for in-house and hosted storefront environments. It immediately snapshots a typical
commerce period, and creates an end-to-end view of the critical flows comprising storefront delivery. Service levels across
the distributed environment, including network, web servers and product information repositories are analyzed and
recommendations created for optimization of the storefront infrastructure. Key service level indicators are preconfigured and
monitored for automated correlation and service level analysis.

SightLine B-to-B is designed for business-to-business ecommerce environments. It provides the ability to assure service
levels of an eBusiness comprised of "back office" components, as well as external information feeds. SightLine B-to-B
consolidates the service levels delivered by both internal and external application components, highlighting relationships and
potential service level impacts created by external dependencies. Key relationships and external indicators are analyzed and
information provided for external vendor and partner management.